Connections and Impact
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GROWING OUR Connections and Impact 2019 Millicom Annual Report Our Purpose: To build the digital highways that connect people, improve lives and develop our communities. Growing Our Connections and Impact Millicom drives its business success through connections that matter. Connections that open doors to knowledge, enable people to thrive in the digital economy and help businesses realize financial opportunities that would otherwise go untapped. We continually pursue new ways to extend the reach and impact of our digital highways through innovations that fuel productive, sustainable growth in the markets where we operate. As we create vital connectivity through our fixed and mobile networks, we also lead responsibly to foster an environment where our employees, customers and communities can prosper and reach their full potential. We strive to lead by example, particularly in ethical business practices and responsiveness to the needs of all people in our communities. We are headquartered in Luxembourg, with a U.S. corporate office in Miami. Through our Tigo and Tigo BusinessTM brands, we provide a wide range of digital services, including high-speed data, cable TV, voice and SMS, Mobile Financial Services, and business solutions. We serve customers in nine Latin American markets— Bolivia, Colombia, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama and Paraguay—as well as in Tanzania. Millicom 2019 Annual Report Who We Are Managing Our Business Fulfilling Our Corporate Responsibility Governance Auditors’ Reports Financial Statements About This Report Our fourth integrated annual report combines our corporate responsibility (CR) and finan- cial reports to provide all our stakeholders with a clear and comprehensive overview of SPOTLIGHTS IN our business and activities in 2019. The report conveys our progress against our business strategy and identifies and quantifies the ways in which our practices and programs THIS REPORT under our CR Framework deliver business value, transform communities, and protect our We seek to make a environment as contemplated under the UN Sustainable Development Goals. positive difference in the Our CR Framework and Five-Year CR plan, against which we are reporting this year, were built on our 2018 Materiality Assessment and ongoing dialogue with internal and lives of individuals, the external stakeholders. We will continue to seek feedback from investors, customers, success of businesses, employees and community leaders to inform about our corporate responsibility efforts. and the progress of [Click here] to find out more about our CR reporting approach. communities through our Note: Our Latin America (Latam) segment includes our Honduras and Guatemala joint actions as a company. ventures as if they were fully consolidated, as this reflects the way our management The impact of our work reviews and uses internally reported information to make decisions about operating matters. We also report in this way to provide increased transparency to investors on throughout 2019 can be those operations. Unless otherwise noted, the data in this report includes the opera- seen in various feature tions of Cable Onda and Telefónica Central America assets in Panama and Nicaragua stories bearing a that Millicom acquired in 2018 and 2019, respectively. Spotlight icon that appears throughout the pages that follow. They What’s Inside This Report demonstrate how our Overview Governance 22,000-plus employees 02 Chairman’s Message 67 Chairman’s report help put Millicom’s 03 Chief Executive Officer’s message 68 Corporate governance framework strategy, purpose and 05 Our Year in Numbers 69 Shareholders and shareholders’ 06 Our Market Leadership meeting responsible leadership 71 Board of Directors and Managing Our Business into action. Board committees 09 Our Market Outlook 74 Board profile–skills and experience 10 Our Financial Performance 77 Board program 15 Supporting Our People 80 Board committees 22 Our Business Strategy and 80 I. Audit Committee Performance 83 II. Compliance and Business 28 Enterprise Risk Management Conduct Committee 33 Compliance and Business Ethics 85 III. Compensation Committee: Fulfilling Our Corporate Responsibility Remuneration Report 36 Our CR Framework 92 Millicom CEO and Executive Team 38 CR Fundamentals 99 Directors’ Financial and 39 Environment Operating Report 41 Human Rights 100 Management responsibility 42 Ethics statement 43 Inclusion Disclaimers 43 Supply Chain 102 Forward looking statements 44 Our Responsible Leadership in Action 103 Non IFRS definitions 45 Protecting Children 104 Non IFRS reconciliations 47 Empowering Women 49 Connecting Communities Auditors’ Reports and Financial Statement 50 CR Performance Tables 116 Independent Auditor’s Report 64 Assurance Letter 120 Consolidated Financial Statements 127 Notes to the Consolidated Financial Statements Millicom 2019 Annual Report 1 Who We Are Managing Our Business Fulfilling Our Corporate Responsibility Governance Auditors’ Reports Financial Statements Chairman’s Message At the end of 2019, I completed my first year as Chair of Millicom’s Board. I am more impressed than ever with how our digital highways help communities overcome obstacles to access the digital world and enable technological breakthroughs. We are making connections that matter and doing it in the right way. In 2019, Millicom continued straight and true on a path of delivering on our value proposition and business strategy. Steadfast execution against our strategic pil- lars resulted in the company delivering key operational targets and achieving a solid financial performance, despite periods of weaker economic activity and political uncertainty in parts of Latin America. Our unprecedented investments to extend the reach of Millicom’s cable and 4G network across nine countries further strengthened our position as the leading telecommunications provider in these markets. Along with integrat- ing the businesses in Central America from acquired operations from Telefonica and Cable Onda in Panama, we also finalized the sale of Tigo operations in Chad as part of our strategic focus on Latam. As always, our Governance structure and Business Ethics and Compliance programs were key to navigating some of the risks inherent to operating in emerging markets. Doing business in the right way is a fundamental driver embodied in our new “Sangre Tigo” framework that sets the tone from the top and cascading down through the whole organization. We believe our commitment to ethics and compliance builds strength and success for our com- pany, and positions Tigo as a force for positive change in the countries and communities we serve. The listing of Millicom’s common shares in the U.S. in NASDAQ Stock Market in January 2019 has opened greater opportunities to reach potential investors and provided additional support for our growth strategy. We paid special attention this year to enhancing controls and policies in our first year of compliance with the Sarbanes-Oxley Act. This was also a transformational year of progress in our efforts to bring lasting social, environmental and eco- nomic value to the people and communities we serve. I am proud of how we are building our market leadership on a sound strategy that intertwines Millicom’s Corporate Responsibility framework with our business objectives. For us, doing good business and doing what’s right are two sides of the same coin. Ultimately, it’s our people who bring our ambitious vision to life. We recognize the importance of ensuring that Millicom is a place where employees feel safe, protected and supported in ways that enable them to do well, and enhance their lives and the lives of those around them. I am pleased that we took steps in 2019 to create a more robust Diversity and Inclusion strategy. 2019 ended with another important milestone in our history as the company’s largest long term shareholder, Kinnevik AB, exited as a shareholder through a distribution of its entire 37% stake in Millicom. On behalf of the Board, I want to extend our gratitude for the valuable role Kinnevik has played in our company’s story. Now begins an exciting new chapter for Millicom as a business 100% owned by public shareholders who can trade TIGO on both the U.S. and Stockholm NASDAQ exchanges. In my first year as Chairman, I deeply appreciated the ways that our newest Board members—Pernille Erenbjerg, Mercedes Johnson and Jim Thompson—stepped into their responsibilities with poise and enthusiasm. We are for- tunate to gain their deep business experience and regional knowledge. I also want to recognize the contributions made by Tom Boardman, Anders Jensen and Roger Sole Rafols, who ended their Board service in 2019. Lastly, I thank the Executive Team for executing our business strategy so capably. Their commitment made a tre- mendous impact on our performance in 2019 and positioned us for even greater success in 2020 and beyond. It is my pleasure to share our Annual Report with you. I hope you find this summary of our business and Corporate Responsibility achievements to be as exciting and inspiring as I have. José Antonio Ríos García Chairman of the Board of Directors Millicom 2019 Annual Report 2 Who We Are Managing Our Business Fulfilling Our Corporate Responsibility Governance Auditors’ Reports Financial Statements Chief Executive Officer’s Message 2019 was a pivotal year for our company, with several game-changing milestones. Our collaborative approach to executing our business and corporate responsibility strategies provided results that truly benefited our share- holders, our customers, our employees and the communities of the countries we serve. We reinforced our commitment to Central America with an unparal- leled inorganic investment of more than $3 billion over the last 18 months, adding Cable Onda in Panama and Telefónica’s operations in Nicaragua, Panama and Costa Rica1 to our existing operations. These transactions enhanced our footprint and advanced our goal to rede- “We have an obligation to ploy capital from under-performing to higher-performing regions. As a result, we significantly enhanced Tigo’s mobile and fixed conver- ensure the technology we gence capabilities in 2019. Tigo is now the No.